Self-Regulatory Organizations; Municipal Securities Rulemaking Board; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend MSRB Rule G-27, on Supervision, To Further Extend the Current Regulatory Relief for Remote Office Inspections Through June 30, 2023, 71719-71722 [2022-25475]

Download as PDF Federal Register / Vol. 87, No. 225 / Wednesday, November 23, 2022 / Notices lotter on DSK11XQN23PROD with NOTICES1 Commission believes that the proposed back-up calculation is designed to help FICC avoid gaps in assessing the sufficiency of its prefunded financial resources due to the inability to access the vendor-sourced data. Taken together, the Commission believes that these aspects of the proposed rule change, as described in section I.C.1, should better enable FICC to evaluate and manage the credit risk presented by its Clearing Members. The Commission believes that the proposed rule change is designed to improve FICC’s ability to establish, implement, maintain and enforce written policies and procedures reasonably designed to maintain sufficient prefunded financial resources that, at a minimum, enable FICC to cover the default of the Clearing Member (including relevant affiliates) that would potentially cause the largest aggregate credit exposure for FICC in extreme but plausible conditions, as required under Rule 17Ad– 22(e)(4)(iii).31 Accordingly, the Commission believes that the proposed rule change should help FICC to continue providing prompt and accurate clearance and settlement of securities transactions even in extreme but plausible historical and hypothetical stress scenarios, consistent with Section 17A(b)(3)(F) of the Act.32 B. Consistency With Rule 17Ad– 22(e)(4)(iii) and (vi) Rule 17Ad–22(e)(4)(iii) requires, in part, each covered clearing agency to establish, implement, maintain and enforce written policies and procedures reasonably designed to effectively identify, measure, monitor, and manage its credit exposures to participants and those arising from its payment, clearing, and settlement processes, by maintaining additional financial resources at the minimum to enable it to cover a wide range of foreseeable stress scenarios that include, but are not limited to, the default of the participant family that would potentially cause the largest aggregate credit exposure for the covered clearing agency in extreme but plausible market conditions.33 Rule 17Ad–22(e)(4)(vi) requires, in part, each covered clearing agency to effectively identify, measure, monitor, and manage its credit exposures to participants and those arising from its payment, clearing, and settlement processes, by testing the sufficiency of its total financial resources available by conducting stress testing of its total financial resources once each day using standard 31 17 CFR 240.17Ad–22(e)(4). 32 Id. 33 17 CFR 240.17Ad–22(e)(4)(iii). VerDate Sep<11>2014 16:45 Nov 22, 2022 Jkt 259001 predetermined parameters and assumptions.34 As described above in Section I.C.1, FICC proposes to change its stress testing methodology to use vendorsupplied data in the GSD stress testing program and to incorporate a back-up calculation that it would utilize in the event of an interruption in the availability of that data. Taken together, these changes should allow FICC to identify and analyze risk exposures under a broader range of stressed market conditions covering a longer time period, which should, in turn, help FICC identify the amount of financial resources necessary to cover its credit exposure under stress scenarios in extreme but plausible market conditions. Accordingly, the Commission believes that FICC’s proposed amendments to the ST Framework with respect to the GSD stress testing program set forth in section I.C.1 are consistent with Rule 17Ad–22(e)(4)(iii) because it should better enable FICC to assess its ability to maintain sufficient financial resources to cover a wide range of foreseeable stress scenarios that include the default of the member (including relevant affiliates) that would potentially cause FICC’s largest aggregate credit exposure in extreme but plausible conditions.35 Additionally, the Commission believes FICC’s proposed amendments to the ST Framework set forth in section I.C.1 are consistent with Rule 17Ad–22(e)(4)(vi) because it should enable FICC to test the sufficiency of its minimum financial resources by conducting stress testing using standard predetermined parameters and assumptions.36 V. Conclusion On the basis of the foregoing, the Commission finds that the Proposed Rule Changes are consistent with the requirements of the Act and in particular with the requirements of Section 17A of the Act 37 and the rules and regulations promulgated thereunder. It is therefore ordered, pursuant to Section 19(b)(2) of the Act 38 that proposed rule changes SR–DTC–2022– 006, SR–FICC–2022–004, and SR– NSCC–2022–006, be, and hereby are, approved.39 34 17 CFR 240.17Ad–22(e)(4)(vi). 17 CFR 240.17Ad–22(e)(4)(iii). 36 See 17 CFR 240.17Ad–22(e)(4)(vi). 37 15 U.S.C. 78q–1. 38 15 U.S.C. 78s(b)(2). 39 In approving the proposed rule change, the Commission considered the proposals’ impact on efficiency, competition, and capital formation. 15 U.S.C. 78c(f). 35 See PO 00000 Frm 00151 Fmt 4703 Sfmt 4703 71719 For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.40 Sherry R. Haywood, Assistant Secretary. [FR Doc. 2022–25474 Filed 11–22–22; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–96346; File No. SR–MSRB– 2022–08] Self-Regulatory Organizations; Municipal Securities Rulemaking Board; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend MSRB Rule G–27, on Supervision, To Further Extend the Current Regulatory Relief for Remote Office Inspections Through June 30, 2023 November 17, 2022. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’ or ‘‘Exchange Act’’) 1 and Rule 19b–4 thereunder,2 notice is hereby given that on November 16, 2022, the Municipal Securities Rulemaking Board (‘‘MSRB’’ or ‘‘Board’’) filed with the Securities and Exchange Commission (‘‘SEC’’ or ‘‘Commission’’) the proposed rule change as described in Items I, II, and III below, which Items have been prepared by the MSRB. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The MSRB filed with the Commission a proposed rule change to amend Supplementary Material .01, Temporary Relief for Completing Office Inspections, of MSRB Rule G–27, on supervision, to further extend the current regulatory relief and permit brokers, dealers and municipal securities dealers (collectively, ‘‘dealers’’) to conduct office inspections, due to be completed during calendar year 2023, remotely, through June 30, 2023 (the ‘‘proposed rule change’’). The MSRB has designated the proposed rule change as constituting a ‘‘noncontroversial’’ rule change under Section 19(b)(3)(A) 3 of the Act and Rule 19b–4(f)(6) 4 thereunder, which renders the proposal effective upon receipt of 40 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 3 15 U.S.C. 78s(b)(3)(A). 4 17 CFR 240.19b–4(f)(6). 1 15 E:\FR\FM\23NON1.SGM 23NON1 71720 Federal Register / Vol. 87, No. 225 / Wednesday, November 23, 2022 / Notices this filing by the Commission. The MSRB proposes an operative date of January 1, 2023. The text of the proposed rule change is available on the MSRB’s website at https://msrb.org/2022-SEC-Filings, at the MSRB’s principal office, and at the Commission’s Public Reference Room. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the MSRB included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The MSRB has prepared summaries, set forth in Sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change lotter on DSK11XQN23PROD with NOTICES1 1. Purpose The MSRB has continued to monitor the impact of the coronavirus disease (‘‘COVID–19’’ or ‘‘pandemic’’) on municipal market participants and how dealers’ operations and business models have evolved during the public health crisis. The MSRB understands that a large number of firms have integrated a hybrid work environment in which particular business functions continue to be de-centralized. Given that dealers are still devising plans and spending time to implement hybrid work environments more fully, the MSRB believes the additional time of a sixmonth extension to conduct office inspections remotely, due to be completed in calendar year 2023, would allow dealers time to focus on the integration of their hybrid work environments. The MSRB previously filed a proposed rule change for immediate effectiveness with the SEC in April 2020,5 a second proposed rule change in December 2020,6 a third proposed rule change in October 2021,7 and a fourth proposed rule change in March 2022 8 5 See Exchange Act Release No. 88694 (April 20, 2020), 85 FR 23088 (April 24, 2020) (File No. SR– MSRB–2020–01). 6 See Exchange Act Release No. 90621 (December 9, 2020), 85 FR 81254 (December 15, 2020) (File No. SR–MSRB–2020–09). 7 See Exchange Act Release No. 93435 (October 27, 2021), 86 FR 60522 (November 2, 2021) (File No. SR–MSRB–2021–06). 8 See Exchange Act Release No. 94383 (March 9. 2022), 87 FR 14596 (March 15, 2022) (File No. SR– MSRB–2022–01). VerDate Sep<11>2014 16:45 Nov 22, 2022 Jkt 259001 (‘‘April relief,’’ ‘‘December relief’’ ‘‘October relief,’’ and ‘‘March relief’’). In connection with the April relief, the MSRB provided an extension of time for dealers to complete certain supervisory obligations, including, among other things, that office inspections due to be conducted during calendar year 2020 could be conducted by March 31, 2021, but with the expectation that dealers would conduct their inspections on-site. The December relief provided dealers with the option to conduct their office inspections remotely that were due to be completed by March 31, 2021 (for calendar year 2020) and those for calendar year 2021, subject to certain conditions being met. The October relief provided an additional extension of time permitting dealers to continue to conduct office inspections remotely until June 30, 2022, for their office inspections that were due to be completed for calendar year 2022.9 The March relief allowed for dealers to complete office inspections, due to be completed during calendar year 2022, remotely until December 31, 2022. Through stakeholder engagement, the MSRB understands that dealers delayed their original return to office plans due to the continued pandemic and only more recently implemented long-term hybrid work arrangements dependent on functions and regulatory requirements, which continue to lead to logistical challenges to conducting inperson office inspections that are still being addressed. To that end, in recognition of the aforementioned challenges, and in order to address ongoing industry-wide concerns regarding having to conduct in-person office inspections while safety concerns continue to evolve as new infections, hospitalizations, and deaths due to the COVID–19 virus still persist in the United States,10 the MSRB is proposing 9 The MSRB noted in the October relief that it would continue to assess through engagement with key stakeholders the effectiveness of remote office inspections on dealers’ overall supervisory systems and would consider more long-term regulatory initiatives that align with and promote the evolving ways dealers are doing business and supervising the activities of the dealer and its associated persons. See Exchange Act Release No. 93435 (October 27, 2021), 86 FR 60522 (November 2, 2021) (File No. SR–MSRB–2021–06). The MSRB is still undertaking such review. 10 See The Centers for Disease Control and Prevention (‘‘CDC’’), COVID Data Tracker (showing that as of September 29, 2022, there are 47,112 daily average new cases of COVID–19, 343 daily average new deaths from COVID–19, and 3,634 daily average new hospitalizations from COVID–19 in the United States). The CDC’s COVID Data Tracker is available at https://covid.cdc.gov/covid-datatracker/#datatracker-home. The MSRB recognizes that the aforementioned numbers are not representative of cases, hospitalizations and deaths during the height of the pandemic, but is also PO 00000 Frm 00152 Fmt 4703 Sfmt 4703 amendments to Supplementary Material .01 of MSRB Rule G–27. Specifically, the proposed amendments to Supplementary Material .01 of MSRB Rule G–27 would allow dealers to satisfy their office inspection obligations by permitting dealers to conduct calendar year 2023 office inspections remotely for the first six months of 2023—extending the current relief for an additional six months from December 31, 2022, to June 30, 2023.11 The conditions required to be met for dealers to avail themselves of the option to conduct office inspections remotely would remain unchanged under Rule G–27; however, amendments are being proposed to paragraphs (a) and (d) of Supplementary Material .01 to reflect the additional extension of time under the proposed rule change. Pursuant to paragraphs (b)–(d) of Supplementary Material .01 of MSRB Rule G–27, dealers electing to conduct their office inspections remotely must (i) amend or supplement their written supervisory procedures as appropriate to provide for remote inspections that are reasonably designed to assist in detecting and preventing violations of, and achieving compliance with, applicable securities laws and regulations, and with applicable Board rules; (ii) use remote office inspections as part of an effective supervisory system, which would include the ongoing review of activities and functions occurring at all offices and locations whether or not the dealer conducts inspections remotely; and (iii) make and maintain the required records for all offices or locations that had inspections that were conducted remotely; and any offices or locations for which the dealer determined to impose additional supervisory procedures or more frequent monitoring. 2. Statutory Basis The MSRB believes that the proposed rule change is consistent with Section 15B(b)(2)(C) of the Exchange Act,12 which provides that the MSRB’s rules shall be designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to foster cooperation and coordination with persons engaged in regulating, clearing, settling, processing information with respect to, and mindful that new variants and breakthrough cases persist. 11 As previously noted, a temporary location established in response to the implementation of a business continuity plan is not deemed an office for purposes of complying with the office inspection obligations, under MSRB Rule G–27. See supra note 5. 12 15 U.S.C. 78o–4(b)(2)(C). E:\FR\FM\23NON1.SGM 23NON1 lotter on DSK11XQN23PROD with NOTICES1 Federal Register / Vol. 87, No. 225 / Wednesday, November 23, 2022 / Notices facilitating transactions in municipal securities and municipal financial products, to remove impediments to and perfect the mechanism of a free and open market in municipal securities and municipal financial products, and, in general, to protect investors, municipal entities, obligated persons, and the public interest. The proposed rule change is designed to provide dealers additional time to comply with certain obligations under MSRB rules for a temporary period of time. The proposed rule change does not relieve dealers from compliance with their core regulatory obligations to establish and maintain a system to supervise the activities of each of their associated persons that is reasonably designed to achieve compliance with applicable rules and regulations, and with applicable MSRB rules, which serve to protect investors, municipal entities, obligated persons, and the public interest. The MSRB continues to believe that an additional extension affording dealers the option to conduct remote inspections, due to be completed in calendar year 2023, for the first half of the calendar year, or until June 30, 2023, is a prudent regulatory approach. This approach will allow dealers time to adapt to long-term hybrid work arrangements more fully and to continue to assess the ongoing events related to the pandemic while continuing to serve the important investor protection objectives of the inspection obligations. In a time when faced with unique challenges resulting from the sustained pandemic and while much uncertainty still remains, the proposed rule change will afford dealers the ability to safeguard the health and safety of their personnel and to more effectively allocate resources to serve and promote the protection of investors, municipal entities, obligated persons and the public interest. In addition, the proposed rule change also will alleviate some of the operational challenges dealers may be experiencing, which will allow them to more effectively allocate resources to the operations that facilitate transactions in municipal securities and municipal financial products, to remove impediments to and perfect the mechanism of a free and open market in municipal securities and municipal financial products.13 13 The proposed amendments only create the option for dealers to conduct office inspections remotely through June 30, 2023. With that in mind, dealers should consider whether, under their particular operating conditions, electing to conduct the required office inspections remotely would be reasonable under facts and circumstances. VerDate Sep<11>2014 16:45 Nov 22, 2022 Jkt 259001 B. Self-Regulatory Organization’s Statement on Burden on Competition Section 15B(b)(2)(C) of the Act requires that MSRB rules be designed not to impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act.14 In fact, the MSRB does not believe that the proposed rule change will have any burden on competition because the proposed rule change treats all dealers equally in that all dealers have the option to elect to conduct remote inspections remotely until June 30, 2023. The goal of the proposed rule change is to grant additional time for dealers to fully focus their time on the establishment and integration of long-term hybrid work arrangements—recognizing the use of a remote work force and transformative technology to decentralize functions— while also balancing the regulatory obligation to establish office inspection schedules for the first half of 2023 and meet their office inspection obligations, under Supplementary Material .01 of Rule G–27. The temporary relief afforded does not alter dealers’ underlying obligations under the rule and with applicable MSRB rules that directly serve investor protection. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others Written comments were neither solicited nor received on the proposed rule change. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Because the foregoing proposed rule change does not: (i) significantly affect the protection of investors or the public interest; (ii) impose any significant burden on competition; and (iii) become operative for 30 days from the date on which it was filed, or such shorter time as the Commission may designate, it has become effective pursuant to Section 19(b)(3)(A) of the Act 15 and Rule 19b– 4(f)(6) 16 thereunder. At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. 14 15 U.S.C. 78o–4(b)(2)(C). U.S.C. 78s(b)(3)(A). 16 17 CFR 240.19b–4(f)(6). IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission’s internet comment form (https://www.sec.gov/ rules/sro.shtml); or • Send an email to rule-comments@ sec.gov. Please include File Number SR– MSRB–2022–08 on the subject line. Paper Comments • Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549. All submissions should refer to File Number SR–MSRB–2022–08. This file number should be included on the subject line if email is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission’s internet website (https://www.sec.gov/ rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for website viewing and printing in the Commission’s Public Reference Room, 100 F Street NE, Washington, DC 20549 on official business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of the filing also will be available for inspection and copying at the principal office of the MSRB. All comments received will be posted without change. Persons submitting comments are cautioned that we do not redact or edit personal identifying information from comment submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR–MSRB–2022–08 and should be submitted on or before December 14, 2022. 15 15 PO 00000 Frm 00153 Fmt 4703 Sfmt 4703 71721 17 17 E:\FR\FM\23NON1.SGM CFR 200.30–3(a)(12). 23NON1 71722 Federal Register / Vol. 87, No. 225 / Wednesday, November 23, 2022 / Notices For the Commission, pursuant to delegated authority.17 Sherry R. Haywood, Assistant Secretary. [FR Doc. 2022–25475 Filed 11–22–22; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Investment Company Act Release No. 34754; File No. 812–15387] Hennessy Funds Trust, et al. November 18, 2022. Securities and Exchange Commission (‘‘Commission’’). ACTION: Notice. lotter on DSK11XQN23PROD with NOTICES1 AGENCY: Notice of an application under section 6(c) of the Investment Company Act of 1940 (the ‘‘Act’’) for an exemption from sections 2(a)(32), 5(a)(1), 22(d) and 22(e) of the Act and rule 22c–1 under the Act and under sections 6(c) and 17(b) of the Act for an exemption from sections 17(a)(1) and 17(a)(2) of the Act. Summary of Application: Applicants request an order (‘‘Order’’) that permits: (a) The Funds (as defined below) to issue shares (‘‘Shares’’) redeemable in large aggregations only (‘‘creation units’’); (b) secondary market transactions in Shares to occur at negotiated market prices rather than at net asset value; (c) certain Funds to pay redemption proceeds, under certain circumstances, more than seven days after the tender of Shares for redemption; and (d) certain affiliated persons of a Fund to deposit securities into, and receive securities from, the Fund in connection with the purchase and redemption of creation units. The relief in the Order would incorporate by reference terms and conditions of the same relief of a previous order granting the same relief sought by applicants, as that order may be amended from time to time (‘‘Reference Order’’).1 Applicants: Hennessy Funds Trust, Hennessy Advisors, Inc. and Quasar Distributors, LLC. Filing Dates: The application was filed on September 21, 2022 and amended on November 3, 2022 and November 16, 2022. Hearing or Notification of Hearing: An order granting the requested relief will be issued unless the Commission orders a hearing. Interested persons may request a hearing on any application by emailing the Commission’s Secretary at Secretarys-Office@sec.gov and serving applicants with a copy of the request by email, if an email address is listed for the relevant applicant below, or personally or by mail, if a physical address is listed for the relevant applicant below. Hearing requests should be received by the Commission by 5:30 p.m. on December 13, 2022, and should be accompanied by proof of service on applicants, in the form of an affidavit or, for lawyers, a certificate of service. Pursuant to rule 0–5 under the Act, hearing requests should state the nature of the writer’s interest, any facts bearing upon the desirability of a hearing on the matter, the reason for the request, and the issues contested. Persons who wish to be notified of a hearing may request notification by emailing the Commission’s Secretary. The Commission: Secretarys-Office@sec.gov. Applicants: Teresa M. Nilsen, Hennessy Advisors, Inc., 7250 Redwood Blvd., Suite 200, Novato, California 94945, terry@ hennessyfunds.com; Peter D. Fetzer, 777 East Wisconsin Avenue, Suite 3800, Milwaukee, Wisconsin 53202, pfetzer@ foley.com. ADDRESSES: FOR FURTHER INFORMATION CONTACT: Deepak T. Pai, Senior Counsel, or Lisa Reid Ragen, Branch Chief, at (202) 551– 6825 (Division of Investment Management, Chief Counsel’s Office). For Applicants’ representations, legal analysis, and conditions, please refer to Applicants’ second amended and restated application, dated November 16, 2022, which may be obtained via the Commission’s website by searching for the file number at the top of this document, or for an Applicant using the Company name search field, on the SEC’s EDGAR system. The SEC’s EDGAR system may be searched at https://www.sec.gov/edgar/searchedgar/ legacy/companysearch.html. You may also call the SEC’s Public Reference Room at (202) 551–8090. For the Commission, by the Division of Investment Management, under delegated authority. SUPPLEMENTARY INFORMATION: Sherry R. Haywood, Assistant Secretary. [FR Doc. 2022–25621 Filed 11–22–22; 8:45 am] BILLING CODE 8011–01–P 1 Blue Tractor ETF Trust and Blue Tractor Group, LLC, Investment Company Act Rel. Nos. 33682 (November 14, 2019) (notice) and 33710 (December 10, 2019) (order). VerDate Sep<11>2014 16:45 Nov 22, 2022 Jkt 259001 PO 00000 SECURITIES AND EXCHANGE COMMISSION [Release No. 34–96336; File No. SR– NYSENAT–2022–25] Self-Regulatory Organizations; NYSE National, Inc.; Notice of Filing and Order Granting Accelerated Approval of a Proposed Rule Change To Make Certain Revisions to the Preamble to Rule 10.9217 and Add Rule 2.1210 to the List of Minor Rule Violations in Rule 10.9217(f) November 17, 2022. Pursuant to Section 19(b)(1) 1 of the Securities Exchange Act of 1934 (the ‘‘Act’’) 2 and Rule 19b–4 thereunder,3 notice is hereby given that, on November 4, 2022, NYSE National, Inc. (‘‘NYSE National’’ or the ‘‘Exchange’’) filed with the Securities and Exchange Commission (the ‘‘Commission’’) the proposed rule change as described in Items I and II below, which Items have been prepared by the Exchange. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons and approving the proposal on an accelerated basis. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to (1) make certain revisions to the preamble to Rule 10.9217 (Violations Appropriate for Disposition Under Rule 10.9216(b)); (2) add Rule 2.1210 (Registration Requirements) to the list of minor rule violations in Rule 10.9217(f) and associated fine levels in Rule 10.9217(g); and (3) make certain non-substantive clarifying changes to Rule 10.9217. The proposed rule change is available on the Exchange’s website at www.nyse.com, at the principal office of the Exchange, and at the Commission’s Public Reference Room. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the self-regulatory organization included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of those statements may be examined at the places specified in Item III below. The Exchange has prepared summaries, set forth in sections A, B, and C below, 1 15 U.S.C. 78s(b)(1). U.S.C. 78a. 3 17 CFR 240.19b–4. 2 15 Frm 00154 Fmt 4703 Sfmt 4703 E:\FR\FM\23NON1.SGM 23NON1

Agencies

SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 87, Number 225 (Wednesday, November 23, 2022)]
[Notices]
[Pages 71719-71722]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-25475]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-96346; File No. SR-MSRB-2022-08]


Self-Regulatory Organizations; Municipal Securities Rulemaking 
Board; Notice of Filing and Immediate Effectiveness of a Proposed Rule 
Change To Amend MSRB Rule G-27, on Supervision, To Further Extend the 
Current Regulatory Relief for Remote Office Inspections Through June 
30, 2023

November 17, 2022.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'' or ``Exchange Act'') \1\ and Rule 19b-4 thereunder,\2\ notice 
is hereby given that on November 16, 2022, the Municipal Securities 
Rulemaking Board (``MSRB'' or ``Board'') filed with the Securities and 
Exchange Commission (``SEC'' or ``Commission'') the proposed rule 
change as described in Items I, II, and III below, which Items have 
been prepared by the MSRB. The Commission is publishing this notice to 
solicit comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The MSRB filed with the Commission a proposed rule change to amend 
Supplementary Material .01, Temporary Relief for Completing Office 
Inspections, of MSRB Rule G-27, on supervision, to further extend the 
current regulatory relief and permit brokers, dealers and municipal 
securities dealers (collectively, ``dealers'') to conduct office 
inspections, due to be completed during calendar year 2023, remotely, 
through June 30, 2023 (the ``proposed rule change'').
    The MSRB has designated the proposed rule change as constituting a 
``noncontroversial'' rule change under Section 19(b)(3)(A) \3\ of the 
Act and Rule 19b-4(f)(6) \4\ thereunder, which renders the proposal 
effective upon receipt of

[[Page 71720]]

this filing by the Commission. The MSRB proposes an operative date of 
January 1, 2023.
---------------------------------------------------------------------------

    \3\ 15 U.S.C. 78s(b)(3)(A).
    \4\ 17 CFR 240.19b-4(f)(6).
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    The text of the proposed rule change is available on the MSRB's 
website at https://msrb.org/2022-SEC-Filings, at the MSRB's principal 
office, and at the Commission's Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the MSRB included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. The MSRB has prepared summaries, set forth in Sections 
A, B, and C below, of the most significant aspects of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The MSRB has continued to monitor the impact of the coronavirus 
disease (``COVID-19'' or ``pandemic'') on municipal market participants 
and how dealers' operations and business models have evolved during the 
public health crisis. The MSRB understands that a large number of firms 
have integrated a hybrid work environment in which particular business 
functions continue to be de-centralized. Given that dealers are still 
devising plans and spending time to implement hybrid work environments 
more fully, the MSRB believes the additional time of a six-month 
extension to conduct office inspections remotely, due to be completed 
in calendar year 2023, would allow dealers time to focus on the 
integration of their hybrid work environments.
    The MSRB previously filed a proposed rule change for immediate 
effectiveness with the SEC in April 2020,\5\ a second proposed rule 
change in December 2020,\6\ a third proposed rule change in October 
2021,\7\ and a fourth proposed rule change in March 2022 \8\ (``April 
relief,'' ``December relief'' ``October relief,'' and ``March 
relief''). In connection with the April relief, the MSRB provided an 
extension of time for dealers to complete certain supervisory 
obligations, including, among other things, that office inspections due 
to be conducted during calendar year 2020 could be conducted by March 
31, 2021, but with the expectation that dealers would conduct their 
inspections on-site. The December relief provided dealers with the 
option to conduct their office inspections remotely that were due to be 
completed by March 31, 2021 (for calendar year 2020) and those for 
calendar year 2021, subject to certain conditions being met. The 
October relief provided an additional extension of time permitting 
dealers to continue to conduct office inspections remotely until June 
30, 2022, for their office inspections that were due to be completed 
for calendar year 2022.\9\ The March relief allowed for dealers to 
complete office inspections, due to be completed during calendar year 
2022, remotely until December 31, 2022.
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    \5\ See Exchange Act Release No. 88694 (April 20, 2020), 85 FR 
23088 (April 24, 2020) (File No. SR-MSRB-2020-01).
    \6\ See Exchange Act Release No. 90621 (December 9, 2020), 85 FR 
81254 (December 15, 2020) (File No. SR-MSRB-2020-09).
    \7\ See Exchange Act Release No. 93435 (October 27, 2021), 86 FR 
60522 (November 2, 2021) (File No. SR-MSRB-2021-06).
    \8\ See Exchange Act Release No. 94383 (March 9. 2022), 87 FR 
14596 (March 15, 2022) (File No. SR-MSRB-2022-01).
    \9\ The MSRB noted in the October relief that it would continue 
to assess through engagement with key stakeholders the effectiveness 
of remote office inspections on dealers' overall supervisory systems 
and would consider more long-term regulatory initiatives that align 
with and promote the evolving ways dealers are doing business and 
supervising the activities of the dealer and its associated persons. 
See Exchange Act Release No. 93435 (October 27, 2021), 86 FR 60522 
(November 2, 2021) (File No. SR-MSRB-2021-06). The MSRB is still 
undertaking such review.
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    Through stakeholder engagement, the MSRB understands that dealers 
delayed their original return to office plans due to the continued 
pandemic and only more recently implemented long-term hybrid work 
arrangements dependent on functions and regulatory requirements, which 
continue to lead to logistical challenges to conducting in-person 
office inspections that are still being addressed. To that end, in 
recognition of the aforementioned challenges, and in order to address 
ongoing industry-wide concerns regarding having to conduct in-person 
office inspections while safety concerns continue to evolve as new 
infections, hospitalizations, and deaths due to the COVID-19 virus 
still persist in the United States,\10\ the MSRB is proposing 
amendments to Supplementary Material .01 of MSRB Rule G-27. 
Specifically, the proposed amendments to Supplementary Material .01 of 
MSRB Rule G-27 would allow dealers to satisfy their office inspection 
obligations by permitting dealers to conduct calendar year 2023 office 
inspections remotely for the first six months of 2023--extending the 
current relief for an additional six months from December 31, 2022, to 
June 30, 2023.\11\
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    \10\ See The Centers for Disease Control and Prevention 
(``CDC''), COVID Data Tracker (showing that as of September 29, 
2022, there are 47,112 daily average new cases of COVID-19, 343 
daily average new deaths from COVID-19, and 3,634 daily average new 
hospitalizations from COVID-19 in the United States). The CDC's 
COVID Data Tracker is available at https://covid.cdc.gov/covid-data-tracker/#datatracker-home. The MSRB recognizes that the 
aforementioned numbers are not representative of cases, 
hospitalizations and deaths during the height of the pandemic, but 
is also mindful that new variants and breakthrough cases persist.
    \11\ As previously noted, a temporary location established in 
response to the implementation of a business continuity plan is not 
deemed an office for purposes of complying with the office 
inspection obligations, under MSRB Rule G-27. See supra note 5.
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    The conditions required to be met for dealers to avail themselves 
of the option to conduct office inspections remotely would remain 
unchanged under Rule G-27; however, amendments are being proposed to 
paragraphs (a) and (d) of Supplementary Material .01 to reflect the 
additional extension of time under the proposed rule change. Pursuant 
to paragraphs (b)-(d) of Supplementary Material .01 of MSRB Rule G-27, 
dealers electing to conduct their office inspections remotely must (i) 
amend or supplement their written supervisory procedures as appropriate 
to provide for remote inspections that are reasonably designed to 
assist in detecting and preventing violations of, and achieving 
compliance with, applicable securities laws and regulations, and with 
applicable Board rules; (ii) use remote office inspections as part of 
an effective supervisory system, which would include the ongoing review 
of activities and functions occurring at all offices and locations 
whether or not the dealer conducts inspections remotely; and (iii) make 
and maintain the required records for all offices or locations that had 
inspections that were conducted remotely; and any offices or locations 
for which the dealer determined to impose additional supervisory 
procedures or more frequent monitoring.
2. Statutory Basis
    The MSRB believes that the proposed rule change is consistent with 
Section 15B(b)(2)(C) of the Exchange Act,\12\ which provides that the 
MSRB's rules shall be designed to prevent fraudulent and manipulative 
acts and practices, to promote just and equitable principles of trade, 
to foster cooperation and coordination with persons engaged in 
regulating, clearing, settling, processing information with respect to, 
and

[[Page 71721]]

facilitating transactions in municipal securities and municipal 
financial products, to remove impediments to and perfect the mechanism 
of a free and open market in municipal securities and municipal 
financial products, and, in general, to protect investors, municipal 
entities, obligated persons, and the public interest.
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    \12\ 15 U.S.C. 78o-4(b)(2)(C).
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    The proposed rule change is designed to provide dealers additional 
time to comply with certain obligations under MSRB rules for a 
temporary period of time. The proposed rule change does not relieve 
dealers from compliance with their core regulatory obligations to 
establish and maintain a system to supervise the activities of each of 
their associated persons that is reasonably designed to achieve 
compliance with applicable rules and regulations, and with applicable 
MSRB rules, which serve to protect investors, municipal entities, 
obligated persons, and the public interest. The MSRB continues to 
believe that an additional extension affording dealers the option to 
conduct remote inspections, due to be completed in calendar year 2023, 
for the first half of the calendar year, or until June 30, 2023, is a 
prudent regulatory approach. This approach will allow dealers time to 
adapt to long-term hybrid work arrangements more fully and to continue 
to assess the ongoing events related to the pandemic while continuing 
to serve the important investor protection objectives of the inspection 
obligations.
    In a time when faced with unique challenges resulting from the 
sustained pandemic and while much uncertainty still remains, the 
proposed rule change will afford dealers the ability to safeguard the 
health and safety of their personnel and to more effectively allocate 
resources to serve and promote the protection of investors, municipal 
entities, obligated persons and the public interest. In addition, the 
proposed rule change also will alleviate some of the operational 
challenges dealers may be experiencing, which will allow them to more 
effectively allocate resources to the operations that facilitate 
transactions in municipal securities and municipal financial products, 
to remove impediments to and perfect the mechanism of a free and open 
market in municipal securities and municipal financial products.\13\
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    \13\ The proposed amendments only create the option for dealers 
to conduct office inspections remotely through June 30, 2023. With 
that in mind, dealers should consider whether, under their 
particular operating conditions, electing to conduct the required 
office inspections remotely would be reasonable under facts and 
circumstances.
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B. Self-Regulatory Organization's Statement on Burden on Competition

    Section 15B(b)(2)(C) of the Act requires that MSRB rules be 
designed not to impose any burden on competition that is not necessary 
or appropriate in furtherance of the purposes of the Act.\14\ In fact, 
the MSRB does not believe that the proposed rule change will have any 
burden on competition because the proposed rule change treats all 
dealers equally in that all dealers have the option to elect to conduct 
remote inspections remotely until June 30, 2023. The goal of the 
proposed rule change is to grant additional time for dealers to fully 
focus their time on the establishment and integration of long-term 
hybrid work arrangements--recognizing the use of a remote work force 
and transformative technology to decentralize functions--while also 
balancing the regulatory obligation to establish office inspection 
schedules for the first half of 2023 and meet their office inspection 
obligations, under Supplementary Material .01 of Rule G-27. The 
temporary relief afforded does not alter dealers' underlying 
obligations under the rule and with applicable MSRB rules that directly 
serve investor protection.
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    \14\ 15 U.S.C. 78o-4(b)(2)(C).
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C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    Written comments were neither solicited nor received on the 
proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Because the foregoing proposed rule change does not: (i) 
significantly affect the protection of investors or the public 
interest; (ii) impose any significant burden on competition; and (iii) 
become operative for 30 days from the date on which it was filed, or 
such shorter time as the Commission may designate, it has become 
effective pursuant to Section 19(b)(3)(A) of the Act \15\ and Rule 19b-
4(f)(6) \16\ thereunder. At any time within 60 days of the filing of 
the proposed rule change, the Commission summarily may temporarily 
suspend such rule change if it appears to the Commission that such 
action is necessary or appropriate in the public interest, for the 
protection of investors, or otherwise in furtherance of the purposes of 
the Act.
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    \15\ 15 U.S.C. 78s(b)(3)(A).
    \16\ 17 CFR 240.19b-4(f)(6).
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IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please 
include File Number SR-MSRB-2022-08 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, 100 F Street NE, Washington, DC 20549.

All submissions should refer to File Number SR-MSRB-2022-08. This file 
number should be included on the subject line if email is used. To help 
the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's internet website (https://www.sec.gov/rules/sro.shtml). 
Copies of the submission, all subsequent amendments, all written 
statements with respect to the proposed rule change that are filed with 
the Commission, and all written communications relating to the proposed 
rule change between the Commission and any person, other than those 
that may be withheld from the public in accordance with the provisions 
of 5 U.S.C. 552, will be available for website viewing and printing in 
the Commission's Public Reference Room, 100 F Street NE, Washington, DC 
20549 on official business days between the hours of 10:00 a.m. and 
3:00 p.m. Copies of the filing also will be available for inspection 
and copying at the principal office of the MSRB. All comments received 
will be posted without change. Persons submitting comments are 
cautioned that we do not redact or edit personal identifying 
information from comment submissions. You should submit only 
information that you wish to make available publicly. All submissions 
should refer to File Number SR-MSRB-2022-08 and should be submitted on 
or before December 14, 2022.
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    \17\ 17 CFR 200.30-3(a)(12).


[[Page 71722]]


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    For the Commission, pursuant to delegated authority.\17\
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2022-25475 Filed 11-22-22; 8:45 am]
BILLING CODE 8011-01-P

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